Exeter may join in lawsuit over state retirement benefits

EXETER — On Monday, selectmen will discuss whether to join a possible lawsuit against the state over what is being called unconstitutional retirement mandates.

Jennifer Feals

EXETER — On Monday, selectmen will discuss whether to join a possible lawsuit against the state over what is being called unconstitutional retirement mandates.

The New Hampshire Local Government Center, the New Hampshire School Boards Association and the New Hampshire Association of Counties are considering legal action against the state for shifting some of the its financial retirement responsibilities onto local governments.

In a letter issued in early July, the associations say this violates Part 1, Article 28-a of the state constitution, which prohibits the state from imposing mandates on communities that it doesn't pay for.

In the 2010-11 state budget, the Legislature has shifted more than $117 million in state costs to local governments, according to the Local Government Center. Starting July 1, the state's retirement contribution drops from 35 percent to 30 percent. That contribution will drop again to 25 percent next July when the 2011 state fiscal year starts, the association says.

If the town wants to join in the litigation, it will be asked to pay a cost of $2,946. Portsmouth, North Hampton and Seabrook have expressed interest in contributing to the suit.

Exeter Town Manager Russell Dean said the cost shift is an unfunded mandate.

"It's something that cities and towns were budgeting one way for and the state shifted gears on an obligation they previously had and changed the rules," he said. "The town is being stuck with the tab on that. It's something the state should pay for as it was promised in prior years."

The town's retirement contribution will increased by $40,000 for 2010, Dean said. The town has annually funded $500,000 in police and fire retirement costs, he said. Dean added that the town has also lost $285,000 in general revenue sharing as part of the 2010 state budget.

"These costs are all shifted onto taxpayers in the communities," he said. "It's not a new expense, it's a reallocation of an obligation, but at the end of the day, locally, we are going to have to pay the tab."

The state created the New Hampshire Retirement System in 1967, according to the Local Government Center. The association claims the state agreed to pay a portion of the local government employer contributions for teachers, police and firefighters.

Prior to 1984, the state agreed to a contribution of 35 percent, which has remained the same until this budget year.

Representatives of the New Hampshire Retirement System informed local government officials that the first payment for the increased employer retirement program is due next month.

The three associations are recommending to their members that they pay the amounts owed, but do so under protest to preserve their right to sue the state for violating Article 28-a.

John Andrews, executive director of the New Hampshire Local Government Center, said in a press release that legal proceedings must start in order to challenge what his group sees as an unconstitutional action and stop the downshifting of state obligations onto local governments.

"Critical jobs, such as teachers, police, firefighters and nursing home staff, are already on the chopping block due to tight local budgets, and this downshifting only puts more local jobs at risk," Andrews said.

"The property taxpayer can no longer be the state's credit card when it needs revenue to pay for programs and services," Andrews said. "This is a clear violation of the long-standing agreement between the retirement system and local governments and is exactly the kind of cost shifting the voters tried to prohibit with their adoption of Article 28-a in the state Constitution."

"The town is being stuck with the tab on that. It's something the state should pay for as it was promised in prior years."

Russell Dean

Exeter town manager

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